Some Philadelphia daycare owners say they are dipping into their savings and taking out loans to stay in business during the budget impasse. (Photo: Rachel Woolf for Chalkbeat)
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For more than three months, Lisa Smith taught several federally funded preschool classrooms at the Amazing Kidz Academy Early Learning Centers in Philadelphia without receiving compensation.
More than 100 children at Smith’s preschool benefit from the state’s Pre-K Counts program, which aims to provide free early learning to lower-income families and children who may be learning English or have special needs.
But as the state budget impasse continues for more than 100 days, Smith and dozens of other Philadelphia providers that directly participate in the program are still waiting for funds, forcing some to consider furloughing staff and closing classrooms, supporters say. Last fiscal year, approximately 150 Philadelphia preschools provided space in Pre-K Counts, serving 5,000 students.
For Smith, the budget impasse meant siphoning thousands from her personal savings and drawing more from her line of credit to keep the daycare afloat. As of this month, the state owes her company more than $300,000 for the Pre-K Counts program.
“Who can run a show for months without money?” Smith said. “Not adopting a budget to fund these programs and expecting us to fund them for so long – that’s disgraceful.”
In Philadelphia, some preschool spaces are managed by the school district, which is already forced to do so borrow up to $1.5 billion to supplement funds from the state budget.
Tyrone Scott, director of government and external affairs for Philadelphia-based First Up, said providers who contract with the district are receiving facilitate with costs and are now in a more stable financial situation.
But for dozens of preschools that have direct contracts with the state, providers and advocates say the budget impasse has pushed an already strained business model to the brink — and even a modern public loan program doesn’t provide full relief.
Lawmakers propose waiving interest for the Pre-K Counts loan program
At the state Capitol, lawmakers appear to be moving on key budget issues like school funding and Medicaid. Pennsylvania has become the only state in the country without a final state budget for the fiscal year.
Although the House is controlled by Democrats adopted a modern budget on Wednesday evening which includes a 5% spending enhance, the Republican-controlled Senate rejected the spending enhance and did not vote on the proposal.
Government officials have recently proposed some support measures, including: modern public loan program for Pre-K Counts providers. This program, called a bridge loan, allows lenders to borrow funds to cover business costs provided they agree to repay the loan with interest at the rate of 4.5% within 15 days of the disbursement of state funds.
But Scott said the interest rate and compact repayment period of the loan concerned some providers.
“It’s still something people are concerned about,” Scott said. “They want to help children, they want to serve families, but they just need money.”
On Wednesday, the Senate passed a bill that would allow the Treasury to waive interest for early childhood education providers and certain other programs that would qualify for bridge loans. Republican lawmakers presented it as a solution to the financial crisis, which they blame on Democrats.
However, some Democratic lawmakers opposed the legislation, arguing that the state treasury did not have the authority to create the lending program. The House has not yet voted on the bill.
Meanwhile, some providers say they are running out of reserve funds.
Earlier this week, Mercedes Fleet, which runs Bright Little Scholars early childhood education center in Northeast Philadelphia, sent a letter informing parents that if the state budget is not passed by the end of the month, the preschool will have to close its Pre-K Counts classroom until funds are released.
“I can’t go to the owner and say, ‘Hey, the budget didn’t pass, I can’t pay you,’” Fleet said. “You can’t expect people to come to work and not know when they’re going to get paid.”
As for Smith, she said she applied for a bridge loan on Monday and has not yet found out if she has been approved. She hopes that she will be able to get money to maintain the kindergarten.
“I don’t want to close these classes,” Smith said. “I don’t want to do this to families. Parents rely on us. They need us.”
She calls lawmakers almost every day, asking them to pass the budget and get her and her industry out of this financial mess.
Rebecca Redelmeier is a reporter at Chalkbeat Philadelphia. He writes about public schools, early childhood education and issues affecting students, families and teachers throughout Philadelphia. Contact Rebecca at rredelmeier@chalkbeat.org.
